Illness Insurance Cover

  Critical Illness Insurance Cover

Critical illness insurance cover is taken out to remove or reduce financial pressure on diagnosis of one of the serious illnesses that is specific to this type of policy.

The serious illnesses specified as a critical illness are generally cancer, stroke, kidney failure, heart attack, rheumatoid arthritis and multiple sclerosis. The benefit of this type of policy is that it pays a tax-free lump sum on the diagnosis of any one of the serious illnesses specified in the policy provided the policy holder survives for a specified period (usually 28 days) from the date of diagnosis. The monies can be used to fully or partly repay an outstanding mortgage or loan or replace lost income. It is worth pointing out that this tax-free lump sum does not have to be repaid even if the policy holder subsequently goes on to make a full recovery from the diagnosed illness.

Full disclosure of any of the specified illnesses (e.g. the policy holder has suffered a heart attack) is very important as these will be excluded from the cover. If it comes to light that the policy holder is aware of an illness specified in the policy at the time of arranging the cover but has not disclosed it the policy will become void.

Critical illness cover can be taken out on its own or linked to a term assurance policy. If it is linked the lump sum will be payable either on diagnosis of one of the specified illness or on death whichever occurs first.

There are plenty of providers for this type of policy and you should always refer to the individual insurer for details of illnesses covered, definitions and underwriting criteria.

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